World Leadership in High Power Fiber Lasers

www.ipgphotonics.com

IPG Photonics CorporationThe Fiber Laser Company™

(NASDAQ: IPGP)

Canaccord Genuity 36th Annual Growth Conference

August 11, 2016

Safe Harbor Statement

2

The statements in this presentation that relate to future plans, market forecasts, events or performance are forward-looking statements. These statements involve risks and uncertainties, including, risks associated with the strength or weakness of the business conditions in industries and geographic markets that IPG serves, particularly the effect of downturns in the markets IPG serves; uncertainties and adverse changes in the general economic conditions of markets; IPG's ability to penetrate new applications for fiber lasers and increase market share; the rate of acceptance and penetration of IPG's products; inability to manage risks associated with international customers and operations; foreign currency fluctuations; high levels of fixed costs from IPG's vertical integration; the appropriateness of IPG's manufacturing capacity for the level of demand; competitive factors, including declining average selling prices; the effect of acquisitions and investments; inventory write-downs; intellectual property infringement claims and litigation; interruption in supply of key components; manufacturing risks; government regulations and trade sanctions; and other risks identified in the Company's SEC filings. Readers are encouraged to refer to the risk factors described in the Company's Annual Report on Form 10-K and its periodic reports filed with the SEC, as applicable. Actual results, events and performance may differ materially. Readers are cautioned not to rely on the forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

IPG Overview

Global leader in industrial fiber lasers

FY 2015 sales of $901 million; YOY growth of 17%

$4.53 diluted EPS; up 20% YOY

Q2 2016 sales of $252.8 million; YOY growth of 8%

$1.25 diluted EPS; up 9% YOY

Growing acceptance of fiber lasers replacing traditional lasers

Products are sold to OEMs, systems integrators and end

users for use in many industries

Global operations with over 3,700 employees

3

Investment Highlights

Expanding $4.8 billion opportunity for all lasers Approximate average annual growth rate of 6%

Recognized leader in the rapidly growing fiber laser market Estimated 12% CAGR from 2015 to 2020

Significant competitive advantages First mover advantage

Performance, product range and reliability

Lowest cost (vertically integrated model)

Strong IP position

Vertical integration and direct sales model drives industry-leading

margins (54.6% GM in FY 2015, 54.5% GM in Q2 2016)

Broad geographies, end markets and applications Asia & Australia 51%, Europe 33%, North & South America 15%

4

The technology leader and most profitable

company in the rapidly growing fiber laser market

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

All Lasers Fiber Lasers All Lasers Fiber Lasers

2015 2020

Forecast

Materials Processing Advanced Applications Medical

5

Rapidly Taking Share in Large, Existing Laser Markets

$4,800

$1,480

$6,751

$2,600

____________________

Source: Laser Focus World, Industrial Laser Solutions, Strategies Unlimited, Optech Consulting and IPGP estimates.

(000)

Fiber31%

2015 - Share of Total Laser Market

Fiber39%

2020 - Share of Total Laser Market

Materials Processing – Diverse End Uses and Customers

6

Automotive

General Manufacturing

Heavy Industry

Oil & Gas

Shipbuilding

Nuclear

Construction

Aerospace

Shipbuilding

Semi/

Electronics

Displays

Consumer

IPG’s Core Existing Applications

$1,453

$1,867

$569 $662

$385 $431 $520

$718 $644

$1,323

$278 $352

$219 $333

$144 $183

2015 2020 2015 2020 2015 2020 2015 2020

High Power Marking Fine Processing Micro Processing

All Lasers Fiber Lasers

Materials Processing Laser Market

____________________

Source: Laser Focus World, Industrial Laser Solutions, Strategies Unlimited, Optech Consulting and IPGP estimates.

Opportunity for Continued Fiber Laser

Market Share Gain is Significant(US$ mm)

(Excludes lithography)

New Applications

7

IR Laser Applications

Welding

Additive ManufacturingCladding

Cutting Brazing Drilling

Marking Surface Treatment

8

$462

$967

$182 $356

$591

$364

$219

$180

0%

10%

20%

30%

40%

50%

60%

70%

80%

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

2015 2020 2015 2020

Cutting Welding & Other High Power

Fiber Lasers All Other Lasers Fiber Market Share

Fiber Laser Penetration of High Power Applications

9

7%9%

17%

40%

27%

Welding Applications

Power Train

Tube Welding

Car Body ScannerWeldingCar Body Seam Welding/ BrazingOther

81%

3% 16%

Cutting Applications

Flat SheetCutting

Tube Cutting

3D Cutting

(US$ mm)

Welding

Opportunity -

potentially

much more

significant

Niche Welding Applications

Transitions in Welding – Medium and Long Term

10

High Strength Steel

Aluminum

Titanium

Alloys

Thick Materials

Automotive

Aerospace Construction

Heavy Equipment

Railways

Shipbuilding

Transportation & Storage

Decreasing cost of laser welding, new laser welding technologies, know-how,

software & algorithms

In many instances strength of the laser weld > welded material

Diverse Materials Diverse Industries Limited Materials

Aircraft

Autos

Bridges

Buildings

Pipelines

Rails

Railcars

Ships

Storage Tanks

Trucks

Diverse Products

FUTURECURRENT

A Diverse Mix with Year-over-Year Growth

$135.3

$344.1

$53.8

$13.3 $21.5

$131.6

$426.1

$81.0

$13.2

$34.9

$124.8

$499.6

$99.5

$13.8

$56.5 $65.2

$259.6

$49.7

$6.1 $24.8

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

$550

Pulsed High-Power Medium-Power Low-Power QCW

($US mm)

IPG Sales by Product Lines

2013 2014 2015 YTD 2016

11

17,600

20,900 21,200

24,800

32,800

3,400

4,800

7,100

9,900

14,200

200 500 1,000

2,100

4,100

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2011 2012 2013 2014 2015

Un

its

& K

W o

f P

ow

er

So

ld

Total Units Sold*

Kilowatts of High Power and Medium Power Lasers

Kilowatts of QCW Lasers

Acceptance Drives High-Power Growth

____________________*Units excludes telecom components and component PLDs.

12

2011 – 2015 Total Units Sold CAGR: 17%

2011 – 2015 KW Power Sold (Medium and HP) CAGR: 43%

2011 – 2015 KW Power Sold (QCW) CAGR: 113%

KW

KW

KW

KW

KW

KW

KW

KW

KW

KW

Diode Production a Significant Advantage

13

High volume production levels of pump diodes, proprietary processes

and use of unique chip and package designs allows IPG to increase

yields, lower component costs and assure high quality

____________________

Source: IPGP estimates.

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2009 2010 2011 2012 2013 2014 2015

% C

han

ge in

Pac

kage

d D

iod

e C

ost

Test

ed

Ch

ips

Pro

du

ced

Diode Production and Cost Trends

Tested Chip Production Cost/watt % decrease (base yr 2009) Annual cost decrease %

Expand addressable market and enhance future growth opportunities by

addressing new application and customer specific requirements

Recent & New Product Introductions

14

Marking & Engraving

Cutting

Welding

Fine Processing

Additive Manufacturing

Brazing

Drilling

Welding of Alloys and Specialty Materials

Cladding & Deposition

Ablation

Display & Imaging

3D-Cinema

Entertainment and Projection

Micro-processing

Medical Devices

Bio-Medical

Sensing & LIDAR

CURRENT FUTURE

Coupler Shutter Multi-Channel

BEAM

SWITCHES

HIGH-POWER

COLLIMATORS

SCANNING

HEADS

CUTTING HEADS

WELDING

HEADS

• Highest Power Handling > 100kW

• Fast Switch Time < 50usec

• Energy or Time Share Options

• Highest Power Handling > 100kW

• Plug and Play with all IPG Lasers

High-Power

Welding

Heads Advance

Welding

Modules

• Highest Power Handling > 50kW

• Modules for Advanced Welding: Seam Tracking, Wobble, Dual Spot, etc.

• Highest Power Handling > 12kW

• Advance Modules for Cutting

Manual &

Motorized

Cutting

Heads

Zoom

CollimatorMicro-Cutting

Heads

Integrated

MarkerHigh-Power

Scanning

Mid-Power

Scanning

• Integrated Solutions

• Range of applications from low-

power marking to very high-power

welding

Recent & New Product Introductions - Beam Delivery Products

15

Expands total available market, simplifies customer supply chain & improves

customer experience & results

Recent & New Product Introductions – Trifocal Laser

Brazing

16

Laser Spot

Laser Spot

Laser Spot

OBJECTIVES

Reliable brazing process

Increased brazing speed

High quality seam

appearance

Multi-spot technology

Inline cleaning process

ADVANTAGES

Cleaning and joining in one step

Reduction of manual cleaning effort, automated process

Improved reproducibility

Maximum joint strength

Increased brazing speed

Improved joint appearance: straight seam borders,

smooth surface, no spatter, control of brazing temperature

Minimized heat effects on the assembly

Minimized cost

Future Opportunities in Micro-processing

17

Significant area of growth for ultra-fast pulsed lasers, and shorter

wavelength lasers at the green and ultra-violet wavelengths

(US$ mm)

Excimer/DUV

$719

CO2/EUV

$193

Semi/PC

Board/Display

$153

Solar/LED/Other

$367 Other

Applications

64%

Addressable

Market

36%

New Product Introductions: UV Fiber Lasers

Launch:

Ready for introduction

Market Opportunity*:

>$110 million

Low Power UV Laser

$110

$140

2015 2019 (E)

Market Opportunity*

(US$ mm)

*Source: IPG Estimates

Description:

Laser marking module with 2-axis scanner

integrated with IPG UV laser

Applications/Markets:

UV marking for white plastics and cabling;

electronics, aerospace

Advantages:

IPG’s Complete UV Marking Module Provides Ease-

of-Integration, High Performance and Reliability to

Integrators and OEMs at a competitive cost point

18

• Pico and femto pulses enable

microprocessing and medical applications

• Key process areas are micro cutting,

scribing, 3D micro-milling, micro hole

drilling and blind hole machining, laser lift-

off, selective material removal and ultrafine

marking

• Typical industries include production of

consumer and appliances, semiconductor

industry, medical device manufacturing and

medical procedures

• Leverage IPG fiber laser technology into

the $130+M ultrafast laser market segment

by developing compelling new lasers

differentiated by performance, form factor

and total cost of ownership

Ultrafast Lasers

Ultrafast lasers have short pulses of pico (10-12 s) to femtosecond (10-15 s)

duration, pulse duration so short that little of no thermal damage occurs

when laser interacts with materials.

19

New Product Introductions: Ultrafast Lasers

$620M

>$1B

$190M

$300M

2015 2019 (E)

Market Opportunity*

Picosecond

Femtosecond

*Source: Strategies Unlimited

Description: Air-cooled, rack-mountable chassis featuring

remote head produces 500 femtosecond pulses at high

repetition rates totaling >10 Watts average power

Applications/Markets: Medical (Laser Eye Surgery),

Scientific, Ultra-precise micromachining

Advantages: Compact, affordable, reliable femtosecond

laser

Launch: Initial units available

Strategy: IPG’s robust, affordable fiber lasers will enable

femtosecond laser processing to enter the mainstream

20

Industrial Femtosecond IR LaserIndustrial Picosecond IR Laser

Description: Air-cooled, rack-mountable chassis featuring

remote head produces 50 µJ pulses at high repetition rate

totaling >50 Watts average power

Applications/Markets: Sapphire scribing (LED)/cutting

(watch glass), high strength glass cutting

(smartphone/tablet), thin film ablation (display/electronics)

Advantages: Compact, affordable, reliable picosecond

laser

Launch: Ready for introduction

Strategy: IPG will accelerate ultrafast market growth by

providing robust, easy to integrate economical fiber lasers

Large Laser Systems Market Expands Addressable Market

21

38%

9%2%19%

10%

11%

10%

Macro and Micro Laser Systems 2015 - Approximately $9.6 Billion

Forecast Average Growth Rate is 6% p.a.

Cutting

Welding & Brazing

Other High Power

Micro-processing Excluding DUV & EUV

Fine Cutting, Welding & Drilling

Marking

Other Low Power

____________________

Source: Laser Focus World, Industrial Laser Solutions, Strategies Unlimited, Optech Consulting and IPGP estimates.

*Excludes DUV and EUV systems for lithography

Welding, Other High Power and Micro-Processing are expected to

be the fastest growing areas

Systems

22

New system platforms offering specific laser and beam delivery tailored

to specific applications

Small format cutting system, multi purpose welding system and

micromachining systems

Small format cutting

machine

Standard platform system

for welding, cutting & drilling

Micromachining systems

with micron accuracy

Recent & New Product Introductions - Other Macro-Systems

Pipe Cutting

Laser cladding cells

5D Cutting

Welding cells for thick section

Aluminum & Titanium alloys

2D Cutting

Hybrid Welding systems for

thick section metal alloys

23

Other Applications Provide Potential Additional Longer

Term Growth Opportunities

24

____________________

Source: Strategies Unlimited, IPGP estimate of potentially addressable market.

Fiber participation is relatively low in these other applications. Longer term opportunity will depend

on successful product development and market acceptance of fiber laser products.

2015 2020

(US$ mm)

$192

$161

$67

$455

$372

$628

Displays & Light Shows

Sensors, LIDAR & Inspection

Mid-IR Spectroscopy

R&D

Defense

Medical

$569

$236

$108

$594 $524

$1,042

Laser Luminaire Project

Major players in cinema industry have embarked on upgrading cinema

image quality and overall moviegoers experience

Emerging transition of cinema projectors from Xenon Bulb to laser

luminaires presents IPG with an opportunity to enter market with ~$200M

annualized revenue potential

Unique $/W merit figure for IPG high power fiber lasers matches the

projected “top down” laser adoption scenario

IPG high power lasers platform and Red and Green laser technologies

enable leveraging IPG platform commonality to minimize IPG initial

investments required to enter this market

Significant interest from leaders in cinema projectors and high end movie

theater operators

25

Xe Bulb & Film

Cinema Image Quality: Current Status & Trends

26

Brightness in 3D

Dynamic Range

Color Gamut

Resolution

Xenon Bulb Limitations Laser Advantages

>4X Brighter 3D image

(in 35mm format)

Up to 100k:1 dynamic

range vs. current 2k:1

Wider color gamut

(life-like colors)

High resolution

(same for Xenon bulb and

laser)

Cinema Market Opportunity: Up to $2.4B Over 8-10 Years

SegmentScreen

Count

TAM over

8-10 years

Ultra-Premium

IMAX, Dolby, etc.

Mostly 3D

2,000$200M-

$400M

Very Large

Screens

2D and 3D

5,000$250M-

$450M

Large Screens 10,000$300M-

$600M

Medium Screens 38,000$425M-

$950M

55,000*

screens

$1.2B to

$2.4B**

Very Large

Screens 2D

and 3D

Large Screens

Primarily 2D, some

3D capable

Medium Screens, Mostly 2D

3D Ultra

Premium

Projected Top-Down Laser Luminaire

Market Adoption

Laser

Str

ength

Segm

ents

Fib

er

La

se

rs o

r

dio

de

s

* Remaining 85.000 (+/-) screens WW are small size**Revenue opportunity is exclusive of service

27

IPG Medical develops and manufactures lasers and laser-based medical systems:

FDA registered manufacturer (2016)

ISO 13485 (2016)

Main advantages:

High efficacy and safety of treatment due to optimum wavelengths and power parameters

Compact and ultrareliable package

Low cost of equipment and service

Dentistry:

New super pulse lasers for existing and new dental applications in collaboration with one

of the leaders in the market

Urology:

New super pulse fiber laser for endoscopic fragmentation of urethral, ureteral, bladder and

renal calculi, fragmentation of kidney calculi and surgery of benign prostatic hyperplasia

New Platforms for Laser Medicine Based on IPG’s Fiber, Hybrid

Fiber Laser and Diode Sources

28

IPG’s Defensible Laser Position

29

Strong IP Portfolio

Vertical Integrated Business Model

Manufacturing Scale

Global Sales and Production Capabilities

____________________

Please note: IPG has 4 offices in China and 2 offices in Japan. Map excludes all rep offices

Sales & Support

R&D, Mfg.,

Sales & Service

HQ, R&D, Mfg.

Sales & Service

30

10

Application

Centers

worldwide0

50

100

150

200

2011 2012 2013 2014 2015 2016

Sales and Marketing Headcount

31

Three Distribution Channels

OEMs/Integrators Direct Sales Representatives

End User

End User

End User

End User

End User

End User

End User

End User

Factory 1

Factory 2

Factory 3

End User

OEM

Large Manuf.

OEM

Integrator

Representatives

Direct Sales

Direct Sales

Direct Sales

Leveraged Sales Model Maximizes Market Reach

Unique Technology Driving Market Adoption

Fiber Laser

Laser

Output

Fiber Bragg GratingsActive FibersCouplersDiodes

Modular

Scalable

Efficient

Compact

Proprietary Design and Components

High Power Fiber Laser Assembly

Scalable kilowatt

laser modules

32

Vertical Integration Drives Significant Benefits

3333

Fab Operations

Semiconductor Wafer Growth

Diode Processing, Chip Mounting

& Burn-In

Laser diode

Packaging

Up to 120-watts of

power

Optical Preform

Silica based glass

MCVD method

Dope with rare earth ions

Fiber Draw

Draw towers

Fiber Block

Modules

Up to 2000 Watts

Final Assembly

Coupling

Final burn in

Shipment

Components

Bragg Gratings

Isolators

Couplers

Deep in technology

Deep in experience

Vertical Integration

34

Optical Delivery

Systems: Welding

& Cutting Heads,

Scanners, process

fibers

World Leadership in High Power Fiber Lasers

www.ipgphotonics.com

Financial Overview

36

Investment Highlights Highly diversified revenue stream and business model

Customers, powers, geographies, applications

Vertically integrated model driving gross margin

High return on R&D and SG&A drives strong operating margins

Strategically focused and efficient R&D that creates value

Track record of profitability and financial discipline

Strong return on invested capital (excluding cash)

43% in 2015

Financial Highlights

Sales and Gross Margin Growth

37

____________________

(1) Gross margin includes stock-based compensation of $2.2mm, $3.2mm, $4.2mm, $5.3mm, $2.5mm and $3.0mm for

2012, 2013, 2014, 2015, YTD 2015 and YTD 2016, respectively.

$562.5

$648.0

$769.8

$901.3

$434.1

$460.0

54.2%52.5% 54.1% 54.6% 54.5% 54.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

2012 2013 2014 2015 YTD 2015 YTD 2016

Gross Margin(1)

(%)Sales ($ mm)

Revenue ($mm) Gross Margin

Operating Leverage Improvement

38

$562.5

$648.0

$769.8

$901.3

$434.1

$460.0

$208.9 $218.1

$283.8

$342.0

$169.5 $165.0

37.1%33.7%

36.9% 38.0%

39.0%

35.9%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

2012 2013 2014 2015 YTD 2015 YTD 206

Operating Margin(1)

(%)Sales & Operating Income(1) ($mm)

Revenue ($mm) Operating Income ($mm) Operating Margin____________________

(1) Operating income includes stock-based compensation of $8.6mm, $11.7mm, $15.2mm, $19.0mm, $8.9mm and $10.4mm for

2012, 2013, 2014, 2015,YTD 2015 and YTD 2016, respectively.

(2) Operating margin includes FX gains/(losses) of $2.6mm, $5.6mm and ($3.4mm) for 2015, YTD 2015 and YTD 2016, respectively.

(2)

(2)

(2)

Strong Cash and Liquidity Position

Long-term CapEx target <10% of revenue

Investments in product and manufacturing technology development,

capacity expansion and sales and service infrastructure

39

($ in thousands) As of December 31, 2015 As of June 30, 2016

Cash and cash equivalents $582,532 $587,286

Short-term investments $106,584 $126,794

Total assets $1,453,429 $1,629,307

Revolving line-of-credit facilities -- --

Long-term debt, including current portion $19,667 $42,417

Stockholders' equity $1,259,528 $1,422,989

Investment Highlights

Expanding $4.8 billion opportunity for all lasers Approximate average annual growth rate of 6%

Recognized leader in the rapidly growing fiber laser market Estimated 12% CAGR from 2015 to 2020

Significant competitive advantages First mover advantage

Performance, product range and reliability

Lowest cost (vertically integrated model)

Strong IP position

Vertical integration and direct sales model drives industry-leading

margins (54.6% GM in FY 2015, 54.5% GM in Q2 2016)

Broad geographies, end markets and applications Asia & Australia 51%, Europe 33%, North & South America 15%

40

The technology leader and most profitable

company in the rapidly growing fiber laser market

World Leadership in High Power Fiber Lasers

www.ipgphotonics.com

Appendix

Comparison: Cutting with Fiber & CO2 Lasers

42

0.5 mmGALVANIZED

1 mmSTAINLESS

STEEL

2 mmZINC

COATED

3 mmSTEEL

5 mmCOPPER

5 mmSTAINLESS

STEEL

18 mmSTEEL

3 kW Fiber4 kW CO2

+150%

+130%

+110%

+50%

Faster Cutting Speed Fiber’s higher absorption and

excellent beam quality

enable:

Faster cutting speed

with less power

Processing of a wider

variety of materials

____________________

Source: Salvagnini

3kW Fiber 4kW CO2

Energy Consumables Cutting Gas

Maintenance Compressed Air Laser Gas

-55%

Improved productivity and

significantly less energy

consumption = lower cost

per part

Lower Processing Costs

Additive Manufacturing (3D Printing)

Selective Laser Melting or Sintering (SLM/SLS) of metals and metallic alloys are the fastest

growth segments in additive manufacturing (AM) industry

Previous growth in this market has come from plastics whereas metal processes are starting to gain significant traction

Fiber lasers are a critical component of SLS/SLM additive manufacturing equipment with IPG

having achieved strong market position for metal processes

New cost-effective IPG high power green lasers address shortcomings of current processes

(surface roughness, parts tolerances) critical for aerospace and other industries

Move towards higher powers – up to 10-kilowatts – will drive market size

Airbus A-380 3D printed

pneumatic manifold

43

Total Plastics & Metals

$0

$2

$4

$6

$8

$10

$12

2013 2015 2017 2019 2020

3D Printer Forecast($ in billions)

CAGR: ~23%

Source: Wohler’s Report

44

Source: AirforceTimes

Ablates paint from the surface

Vacuum removes 99.9% of residue

Does not require chemicals which produce toxic sludge or

plastic beads

Manual paint stripping requires:

F-16 4 people

16 to 18 people for a C-130

Dept. of Defense current paint stripping costs > $800

million per year (2015 Air Force LCMC)

Many applications outside of aerospace:

Cleaning of molds, casts, tanks, pipes & other

surfaces

New generation of Nano-Second Pulsed laser with

average power up to 4 kilowatt

Pulsed product limits thermal damage to cleaned

surface

Laser Ablation for Paint Stripping and Cleaning

Sources:

*Potential alternative report for the portable handheld laser small area

supplemental coating removal system, prepared for USAF by SAIC, Feb. 2001

** Penn State Applied Research laboratory, Automated Rotor Blade Stripping

System (ARBSS) study for the USN, 2005

Environmental Benefits:

0

5

10

Media Blast* Solvent* LaserAblation**

Solid

waste

(lb

.) g

enera

ted

Per

1 lb.

on p

ain

t str

ipped

Paint Stripping Method

Plus 165 lbs of Liquid Waste